BHP Billiton's coal interests

BHP Billiton has major coal mining interests in Australia, South Africa, Colombia and the USA. In its internal structure BHP Billiton has separate divisions for "Energy Coal", which caters for power generation, and "Metallurgical Coal" which is used in steel making. In its annual report the company boasts that it is the "world's largest supplier of seaborne metallurgical coal" and "one of the world's largest producers and marketers of export energy coal".

Production
In its 2009 annual report, BHP Billiton reports that its metallurgical coal division produced 36.4 million tonnes and the energy coal division 68 million tonnes in the year to June 30, 2009.

Of the metallurgical coal, operations in the Bowen Basin produced 30.1 million tonnes (up from 27.9 million tonnes the preceding year) and that "reserve lives of the Bowen Basin mines at current production rates range from seven years to 66 years." The company also stated that the Illawarra mines produced 6.3 million tonnes and that the reserve lives of its mines "at current production rates range from five years to 14 years." The company also noted that its 'metallurgical' division coal mines produced minor amounts of energy coal -- 7% from the Bowen Basin and 11% from the Illawarra mines.

The company stated that its Bowen Basin assets are "well positioned to supply the seaborne market" because its mines produced "high-quality metallurgical coals, which are more efficient in blast furnace use", "the relatively low cost of production because of its extensive near-surface deposits" and the regions "geographical proximity to Asian customers." The company also stated that it has "access to key infrastructure, including a modern, integrated electric rail network and our own coal loading terminal at Hay Point, Mackay. This infrastructure enables us to maximise throughput and blending products from multiple mines to optimise the value of our production and satisfy customer requirements."

In a November 2007 presentation to investment analysts by the President of BHP Billiton Coal, Dave Murray stated that the company had an 8% share of the global coal export market, making it the equal second largest coal exporter in the world. (The largest exporter was Xstrata, with an 9% share. BHP Billiton was equal with the Indonesian coal exporter, Bumi Resources). :

Greenhouse risk
In its 2009 annual report, BHP Billiton stated that "we recognise that the need to control carbon dioxide emissions has substantial implications for the use of thermal coal as an energy source. Our Company has committed to invest US$300 million over the five years from June 2007 to support the research, development and demonstration of low-emissions technologies, including ‘clean coal’ and carbon sequestration technologies. We have also developed the capacity to offer our export customers emissions credits in conjunction with their coal purchases."

BHP Billiton's coal subsidiaries
BHP Billiton has interests in the following operations that produce steaming coal :
 * BHP Billiton Energy Coal South Africa which is a wholly owned subsidiary operating three mines - the Middelburg mine, the Khutala mine and the Klipspruit mine;
 * Hunter Valley Energy Coal which is a wholly owned subsidiary which operates the Mt Arthur Coal mine in the Hunter Valley in Australia;
 * Cerrejon Coal Company, Colombia, in which BHP Billiton has a 33.3% interest; Coal from the Cerrejon coal mine is exclusively mareketed by CMC Coal Marketing Company, which has offices in Dublin and Atlanta.
 * New Mexico Coal, North America which is a wholly owned subsidiary operating the San Juan mine and the Navajo mine in New Mexico; and
 * the company is also the exclusive agent for marketing the coal exported from PT Arutmin Indonesia.

The company also has interests in:
 * BHP Billiton Mitsubishi Alliance (BMA), Australia (50 per cent ownership which produces both metallurgical and thermal coal. BMA operates the Goonyella Riverside mine, Peak Downs mine, Saraji mine, Norwich Park mine, Blackwater mine, the Gregory Crinum mine as well as the Hay Point Coal Terminal;
 * Illawarra Coal in Australia which is a wholly owned subsidiary and which produces metallurgical and thermal coal which is marketed through BMA. It operates that Appin mine, the West Cliff mine and the Dendrobium mine. Some of the coal is supplied to the Port Kembla Steelworks and some exported through the Port Kembla Coal Terminal; and
 * BHP Mitsui Coal in Australia in which BHP Billiton has an 80% interest and which produces metallurgical and thermal coal which is marketed through BMA. The joint venture owns the South Walker Creek mine and the Poitrel mine.

Coal Growth Plans
In an investor presentation, BHP Billiton staff flagged a range of coal mining expansion plans to cater for both the Atlantic and the Pacific coal export markets. For the Pacific market the company flagged the expansion of Cerrejon mine in Colombia and the development of Klipspruit and the rationalisation of the Middleburg and Douglas mines in what it refers to as the Douglas-Middelburg Optimisation Project in South Africa. To cater for the expansion of the Pacific market, the company has flagged its intention to develop the Mt Arthur Underground mine as well as the Mt Arthur Coal mine in the Hunter Valley in Australia. It is also looking to develop the Caroona Coal Project in New South Wales, Australia; Western Arctic Coal Project in Alaska, United States and the Southern Start project near Punta Arenas, Chile.

South Africa
In its 2009 annual report BHP Billiton lists a number of potential thermal coal mines as "projects". It also lists several other deposits under the "miscellaneous" subheading. (It appears that the company uses the term "projects" for potential mines where a "measured resource" estimate has been determined while "miscellaneous" is applied to deposits at an earlier exploration stage where the resource has only been indicated or inferred.)

The South African projects listed are:


 * Leandra North coal project;
 * Naudesbank coal project; and
 * Weltevreden coal project.

The deposits listed under the "miscellaneous" sub-heading are:
 * Leandra South coal project;
 * Theunissen coal project;
 * T-Project coal project;
 * Davel coal project; and
 * Remainder Block IV coal project.

Australia
In Australia it lists the Togara South coal project as a potential future thermal coal mine.

The company also lists undeveloped metallurgical coal deposits in Queensland as being the:
 * the Daunia coal project
 * the Red Hill coal project
 * the Peak Downs East coal project
 * the Sariji East coal project
 * the Liskeard coal project
 * the Nebo West coal project
 * the Bee Creek coal project
 * the Wards Well - Lancewood coal project

Indonesia
BHP Billiton has also investigated the Maruwai coal project in central Kalimantan in Indonesia, which holds seven Coal Contracts of Work within which 5 significant coal deposits have already been identified. In July 2009, following the global financial crisis, the company shelved the project after reviewing work on the Haju trial mine. In a brief media release the company stated that it had "assessed the progress of the Haju trial mine and determined it is not a sufficient fit with our long term investment strategy." It also stated that "further evaluation of the company’s interests in the Maruwai Coal Project is underway to determine the best future commercial options." In May 2010 BHP Billiton sold a 25% stake in the project to the Indonesian company Adaro Energy for $335 million.

The five deposits within the umbrella Maruwai coal project are:


 * the Lampunut coal project;
 * the Haju coal project;
 * the Luon coal project;
 * the Bumbun coal project;
 * and the Juloi Northwest coal project

Coal export terminal interests
On its website the North Queensland Bulk Ports Corporation states that in late 2009 it sought sought expressions of interest for the developed of Terminals 2 and 3 at the Abbot Point Coal Terminal. The corporation states that "the Preferred Developers, Hancock Coal Limited and BHP Billiton Limited are currently working with NQBP to enter into a Framework Agreement to progress the project and are finalising preliminary design and environmental studies."

BHP Billiton's lobbyists
In Australia and the US, there are various state and federal lobbyist registration requirements for companies. In Australia the only requirement is for lobbying firms to disclose who their staff are and who clients are. However, there is no requirement to disclose which individual lobbyists work for which clients or what issues they were lobbying on.

The Australian government's lobbyists register states, as of August 2010, that BHP Billiton is represented by John Connolly & Partners Pty Limited and Richardson Coutts. The same firms are registered to represent BHP Billiton in New South Wales as well. In Queensland BHP Billiton is represented by John Connolly & Partners and the Hugo Frank Trust, a company owned by former NSW Premier, Nick Greiner.

Related SourceWatch Articles

 * Australia and coal
 * BHP Billiton
 * Colombia and coal
 * Corporate market share of global coal export trade
 * Global use and production of coal
 * Rio Tinto's coal interests
 * South Africa and coal
 * Xstrata Coal

BHP Presentations to Investors

 * Dave Murray, "BHP Billiton Coal CSG Anlayst Visit: Hunter Valley Energy Coal", BHP Billiton, November 2nd, 2007.
 * Hubie van Dalsen President – Metallurgical Coal, "Prerequisites for Metallurgical Coal Growth", Presentation to Macquarie Australia Conference, May 2010.
 * Marcus Randolph, CEO Ferrous and Coal, "Goldman Sachs JBWere Australasian Investment Forum", New York, March 2010.